Businesses need to make a profit. That is an incontrovertible fact under a capitalist system like ours. In fact, even under different economic models, profits are still necessary to keep cash flowing around an economy.
Despite focusing on elements other than increasing their bottom line, social enterprises and “not-for-profit” businesses still need to have some profit within their operations to be able to keep the lights on and continue doing good for society.
To make this profit, most businesses buy and sell products and/or offer a service to their customers. They charge more for whatever they’re selling than what they pay to produce and/or deliver it and keep what’s left over to pay shareholders or invest in expansion.
So it may seem like a strange move for a business owner to consider giving something away for free. Yet, this is exactly what many of them have chosen to do. For most of them, it actually makes sense and can help to build relationships with customers, gain awareness for products, and even increase sales. Here are the most common strategies that you may want to consider for your business.
When you have a product that speaks for itself, then giving samples away to customers for free so that they can try them out is a great way to find new customers. It’s a trick that has been used by marketers for centuries for just about every product imaginable.
One of the most notable uses of this today is in Costco. The big-box wholesaler has won over the hearts and minds of its customers by offering free samples of many of its products throughout the day.
Customers get to sample new products to see whether they like them and Costco gets to increase its sales on these items. Not only that, but the samples help to increase sales for other products too with many customers choosing to visit the store just to sample what’s on offer that day and going on to buy other items that they may need.
The conventional wisdom in business was that you need to keep your knowledge to yourself. After all, if you teach your customers how to do what you do, then they may choose to do it themselves instead.
That’s been turned on its head by the internet though, with many businesses giving away free information to help reach more customers and educate them about what they offer. Even if they don’t make a purchase right away, you’ve begun building a relationship with them that could later bear fruit.
There are examples of this in just about every sector. In iGaming, PokerStars has created a library of information that explains everything from the basics of how to play poker through to more complex topics like advanced strategy. By doing so, it can reach people that are just starting out in the world of poker and nurture a relationship with them as they go from playing free games to real-money versions.
Meanwhile, in the beauty sector, blow LTD provides detailed guides on how to apply makeup, despite offering makeup artist services themselves. In doing so, they demonstrate their expertise on the topic and show how much effort goes into performing complex tricks like contouring. Of course, some readers will try to do this themselves, but others will engage their services to have it done by a professional.
While free samples work well for products, they don’t work as well for services. That doesn’t mean you can’t still give something away for free, it just requires a different approach.
Service companies often let potential customers try their offering for free with either a time or function limitation. This lets the user evaluate the offering without giving them completely unfettered access so they can use it without paying.
It’s most commonly found in software businesses, though you can find free trials used by gyms, marketing companies, and even some solicitors or may give away some advice for free up front to show their worth.
Mail Chimp is a great example of a free trial, it’s a company that offers a package that’s always free. This is part of a strategy to help businesses grow so that it can be there when they’re ready to start spending money on marketing tools.
In all of these cases, giving something for free doesn’t prevent the businesses from making a profit, instead, it actually helps since it helps to drive sales, even if they are indirectly connected.